TN/RL/GEN/204  
12 November 2020  
(20-8127) Page: 1/3 
Negotiating Group on Rules  Original: English  
 
 
PROPOSED SOLUTION CONCERNING DISPUTE SETTLEMENT INVOLVING  
A TERRITORIALITY OR MARITIME DISPUTE  
Communication from the Philippines  
The following communication, dated 8 November 2020, is being circulated at the request of the 
delegation of the Philippines . 
_______________  
 
… 
Article  X.__Dispute  Settlement  Involving  a Territorial  or Maritime  Dispute  
 
An IUU determination  concerning  waters  subject  to a territorial  or maritime  dispute1 
between  two or more  Members  shall  be considered  to be a determination  for purposes  of 
Article  [X] of this [instrument],  provided  that it is made  by one of the parties  involved  in 
that dispute  and that it is otherwise  in accordance  with Article  [XX].  Neither  this 
[instrument]  nor any decisions  or recommendations  of any WTO  adjudicatory  bodies  
established  under  this [instrument]  or any other  WTO  agreement  shall  have  any legal  
implications  or cons equences  regarding  territoriality  or the delimitation  of maritime  
jurisdictions.  
1 For purposes of this [instrument], a territorial or maritime dispute regarding the waters 
in which the relevant vessel was found to engage in IUU fishing shall be one that i s not 
frivolous and that is properly substantiated under the relevant rules of international law.  
_______  
NOTE:  Article  [X] above  refers  to the provision  that introduces  the concept  of IUU determination  
(paragraph  3.2 in the Chair's  text of June 2020).  Article  [XX] above  refers  to the provision  stating  
that an IUU determination  must be made  on the basis of positive  evidence,  fair, transparent  and 
non-discriminatory  procedures,  etc. (paragraph  3.3 in the Chair's  text of June 2020).  
EXPLANATION : This draft provision  contains  two sentences.  The first addresses  the legal status  
of an IUU determination  concerning  disputed  waters.  This provision  states  that an IUU 
determination  made  by any of the Members  disputing  sovereignty/jurisdiction  over the releva nt 
waters  would  trigger  the subsidy  prohibition  under  the IUU provision.  The second  provides  that 
any WTO determination  regarding  an IUU determination  involving  disputed  waters  would  have no 
legal consequences  for the territoriality  issue.  
What would  the first sentence  mean  in practical  terms?  Imagine  the following  scenario:   
• Member  A is the flag State  of vessel  X; 
• Vessel  X is fishing  in waters  disputed  by Members  A and Z; TN/RL/GEN/204  
 
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  • Member  Z makes  an IUU determination  with respect  to the fishing  activities  of vessel  X in 
the disputed  waters;  
• Member  Z (or any other  Member)  requests  Member  A to remove  any subsidies  to vessel  X 
on the grounds  that it has engaged  in IUU activities  as determined  by Member  Z; 
• Member  A refuses  to withdraw  the subsidy  because  it considers  that Member  Z has no 
jurisdiction  over the disputed  waters  and, therefore,  its IUU determination  against  
vessel  X is not valid;    
• Member  Z brings  a WTO dispute  against  Member  A arguing  that the latter  has refused  to 
withdraw  a subsidy  despite  the fact that there is an IUU determination  against  vessel  X; 
and 
• Member  A argues,  in response,  that Member  Z's IUU determination  has been 
inappropriately  made  because  it had no jurisdiction  over these  waters  and, therefore,  the 
obligation  to withdraw  the subsidy  from vessel X has not been triggered.  
What would  be expected  of a WTO panel  in this scenario?  Under  the first sentence  of the draft 
provision,  the panel  would  have to find (1) whether  the waters  under  which  the IUU determination  
was made  are disputed  (in accordanc e with the footnote),  and (2) whether  the IUU determination  
was made  by one of the Members  involved  in the territorial/maritime  dispute.  If the answer  to 
these  questions  is yes, the panel  would  then assess  whether  that IUU determination  meets  the 
requireme nts of: positive  evidence;  fair, transparent  and non-discriminatory  procedures;  and 
notification  of the initiation  of the investigation  (paragraph  3.3 in the Chair's  text of June 2020).  
If the answer  to this is also yes, the IUU determination  would  then trigger the obligation  to 
withdraw  the subsidy.  Accordingly,  under  this draft provision,  a panel  would  not have to address  
the issue of whether  the Member  making  the IUU determination  has jurisdiction  over those  waters.   
The second  sentence  of the draft provision  has the same  intended  effect  as Option  4 of the Chair's  
proposed  options,  with some  changes  for clarity.  It states  that the recommendations  of the WTO 
dispute  settlement  bodies  (panels,  the Appellate  Body and the Dispute  Settlement  Body)  must 
not have any legal effects  on territorial  or maritime  disputes.   
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  TN/RL/GEN/204  
 
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  EXPLANATION  OF FOOTNOTE  1 OF THE PHILIPPINE  PROPOSAL  
DSU INVOLVING  TERRITORIAL  & MARITIME  DISPUTE  
(RD/TN/RL/131  OF 3 NOV 2020)  
Footnote  1 provides  an understanding  of "territorial  or maritime  dispute"  for purposes  of the draft 
provision  as one that is not "frivolous"  and "properly  substantiated  under  the relevant  rules  
of international  law". The term "frivolous"  has been imported  from the options  that the Chair had 
circulated  and was added  to give continuity  to these  options.  In general,  a claim is "frivolous"  when  
factual  allegations  are clearly  baseless  and/or  the claim  is grounded  on an indisputably  meritless  
legal basis.  The reference  to a "frivolous  claim"  (or similar  expressions)  is common  in several  
domestic  legal systems  as well as under  international  dispute  resolution  mechanisms,  such as 
Rule 41(5)  of the ICSID  Convention  Arbitration  Rules  and Article  3.7, first sentence,  of the WTO 
Dispute  Settlement  Understanding.  
In addition  to the term "frivolous",  Footnote  1 states  that a "territorial  or maritime  dispute"  is one 
that is "properly  substantiated  under  the relevant  rules of international  law". The term "dispute"  has 
been defined  by the International  Court  of Justice  as "a disagreement  on a point of law or fact, a 
conflict  of legal views  or of interests  between  parties".1 This disagreement  must be expressed  by the 
disputing  parties  and there  must be evidence  of it.2 For instance,  the parties  may express  this 
disagreement  bilaterally,  regionally  or multilaterally,  such as at meetings  of the UN General  
Assembly.  This disagreement  may also be expressed  by filing a dispute  with a competent  
adjudicatory  body.  In that case, howe ver, a dispute  that is "properly  substantiated  under  the 
relevant  rules of international  law" would  exist to the extent  that the relevant  body has not yet 
rendered  its decision.  On the contrary,  if a decision  has been rendered,  and the parties  have at any 
time accepted  it as mandatory  and final, there  would  no longer  be a "properly  substantiated  [dispute]  
under  the relevant  rules of international  law". 
Accordingly,  under  Footnote  1, the expressions  "frivolous"  and "properly  substantiated  under  the 
relevant  rules of international  law" inform  one another.  A dispute  that is not "properly  substantiated  
under  the relevant  rules of international  law" would  be "frivolous".   
__________  
 
1 Mavrommatis Palestine Concessions , Judgment No. 2, 1924, P.C.I.J., Series A, No. 2, p. 11.  
2 South West Africa (Ethiopia v. South Africa; Liberia v. South Africa) , Preliminary Objections, 
Judgment, I.C.J. Reports 1962, p. 328.